CP’s shareholder launches proxy battle; wants former CN chief to take over
The largest shareholder in the Canadian Pacific is reportedly launching into a proxy battle to replace directors on the board and the company’s chief executive with the former head of the Canadian National Railway.
Bill Ackman, director of CP shareholder, Pershing Square Capital Management, reportedly wants retired CN chief executive Hunter Harrison to replace current CEO Fred Green.
“We will walk shareholders, people interested in the situation, through the track record of Canadian Pacific and (current CEO) Fred Green,” said Ackman in an interview as reported by the Calgary Herald.
“We’ll introduce Hunter Harrison, give him a chance to show what he would do as CEO of the company. Shortly after we will file a proxy document listing the directors we have in mind,” Ackman said.
The Canadian Pacific’s chairman of the board, John Cleghorn, released a statement in response:
“The board takes all suggestions from shareholders seriously and has carefully considered Pershing Square’s demand that CP replace the company’s chief executive officer with Hunter Harrison...Having considered Pershing Square’s demand, the board came to the unanimous conclusion that replacing the company’s chief executive officer, and thereby jeopardizing the successful execution of the multi-year plan, is not in the best interests of CP or its shareholders.”
Pershing Square reportedly acquired 14.2 percent of Canadian Pacific last fall and started pushing for the hire of former Harrison, who led a turnaround of Canada’s largest railroad at the CN.
The CP reportedly has the poorest performance with regard to operating ratio of the major North American rail carriers.
“It is a mistake to underestimate the difference between the infrastructure of CP and CN,” said Ed Harris, a new CP board member, who is also a former executive vice-president of operations for both of the primary Canadian railroads.
“On the one hand, in CN you have a railroad that was built by Canadian taxpayers with twice the proportion of sidings and double track and that therefore has benefits from significantly enhanced operating flexibility,” he said.
“On the other hand, CP has to contend with greater geographic challenges,” Harris said.
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